Marvel
Marvel
Marvel
This case was prepared as the basis for class discussion rather than to
illustrate effective or ineffective handling of an administrative situation and
was prepared using only public sources and has not been approved by
Marvel Entertainment Group.
Page 1
Exhibit 4
Exhibit 4 Marvel Entertainment Group, Inc.—Consolidated Balance Sheets ($ millions)
9 Months
Ending For Years Ended December 31,
Sept. 1996 1995 1994 1993 1992
Assets
Current Assets:
Cash $35.90 $37.00 $18.10 $17.00 $10.60
Accounts receivable, net 257.2 240 189.5 77.9 69
Inventories 99.1 82.4 51 23.2 16.3
Deferred income taxes 32.5 50.4 7.3 8.3 12.3
Income tax receivable 18.2 24.6 - - -
Prepaid expenses and other 58.2 42.9 31 6.1 2.2
Total current assets 501.1 477.3 296.9 132.5 110.4
Property, plant and equipment, net 87.7 71.3 39.7 12.4 10.9
Goodwill and other intangibles, net 595.7 603.6 433.6 299 302
Investment in and advances to
unconsolidated
subsidiaries 3.2 3.2 20.6 14.2 -
Deferred charges and other 72.7 57.6 37.9 13.9 16.7
Total assets $1,260.4 $1,213.0 $828.7 $472.0 $440.0
Page 2
Exhibit 4
Page 3
Exhibit 5
Exhibit 5 Marvel Entertainment Group, Inc.—Consolidated Statement of Operations ($ millions)
9 Months
Ending For the Years Ended December 31,
Sept. 1996 1995 1994 1993 1992 1991
Provision for income taxes (0.7) 5.7 42.5 38.4 24.1 13.4
(Loss) income before minority interest and extraordinary (14.4)
item (27.7) 61.8 56 32.6 16.5
Minority interest in earnings of Toy Biz 13.5 17.4 - - -
(Loss) income before extraordinary item ($27.9) ($45.1) 61.8 56 32.6 16.5
Page 4
Exhibit 6
Exhibit 6 Marvel Public Debt at the Time of the Reorganization Plan
Issue
Marvel Parent Holdings $251.7) 11.875% $0.781 $0.140 20.0 19.6% 3.8%
Senior secured
Discount notes
Marvel III Holdings $125.0) 9.125% $0.899 $0.139 9.3 9.1% 1.8%
Senior secured notes
Source: Bloomberg, Marvel Entertainment Group, Inc., Disclosure Statement Relating to First Amended Joint
Plan of Reorganization, Wilmington, Delaware, January 28, 1997.
Notes:
a
Market prices are quoted per dollar of face value.
b
Total number of existing ("Old") shares was 101.8 million.
c
Total number of post-reorganization ("New") shares was 528.8 million.
d
Marvel Holdings held an additional 2.93 million shares of Marvel stock for other creditors.
Page 5
Exhibit 6
Page 6
Exhibit 7
Exhibit 7 Liquidation Analysis ($ millions)
Chapter 7 costs
Transaction costsb 4.5
Case related administrative expensesc 6.0
Total Chapter 7 costs 10.5
Notes:
a
Assumes that purchasers discount the low end of the going concern value by 20% to reflect the "fire sale"
nature of the liquidation. The disposition is assumed to be completed at the end of the third quarter of 1997.
b
Investment banks' fees, legal fees, closing costs and other expenses were estimated at 1% of gross
sales proceeds.
c
Includes estimated Chapter 7 trustee's fees, professional costs and other associated
administrative expenses
d
Assumes sale of 7.39 million shares at $17.75 per share, the closing price of Toy Biz stock on
November 11, 1996. Gross proceeds are reduced by 5% to reflect the costs associated with such sales.
e
Amounts projected to be outstanding at March 31, 1997.
f
Includes $5.0 million of severance payments to certain officers and employees
Page 7
Exhibit 7
g
Includes estimates for accounts payable and other accrued liabilities.
Page 8
Exhibit 7
th such sales.
Page 9
Exhibit 7
Page 10
Exhibit 8
Exhibit 8 Marvel Entertainment Group, Inc. - Projected Pro Forma Consolidated Balance Sheet
ASSETS
Current assets:
Cash $13.3 $33.5a $52.0c $98.8
Accounts receivable, net 210.0 210.0
Inventories, net 77.5 77.5
Deferred income taxes 40.1 48.5b,2 88.6
Income tax receivable 11.1 11.1
Prepaid expenses and other 55.0 55.0
Total current assets $407.0 $541.0
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $99.4 $99.40
Accrued expenses and other 143.1 10.0b,1 153.1
Short-term borrowings 40.0 40.0
DIP financing 50.0 (50.0)c —
Current portion of long-term debt 635.4 (624.7)d 10.7
Total current liabilities $967.9 $303.2
Long-term debt — 20.0b 624.7d 754.7
110.0c
Stockholders’ equity:
Common stock 1.0 1.0
Additional paid-in capital 93.1 365.0 a
458.1
Retained earnings (351.7) (351.7)
Total stockholders’ equity ($257.6) $107.4
Source: Marvel Entertainment Group, Inc., Disclosure Statement Relating to First Amended Joint Plan of
Reorganization, Wilmmington, Delaware, January 28, 1997.
Page 11
Exhibit 9
Exhibit 9 Projected Financial Data (in millions)
At
Closing Year Ending December 31,
3/31/1997 1997 1998 1999 2000 2001
INCOME STATEMENT
Net revenues $929.8 $1,128.3 $1,155.8 $1,200.6 $1,247.5
Cost of sales 550.4 647.2 666.9 694.9 724.2
Gross profit 379.4 481.1 488.9 505.7 523.3
Debt-to-Total Capital (book value) 88.2% 88.7% 86.5% 86.9% 83.9% 79.3%
Source: Marvel Entertainment Group, Inc., Disclosure Statement Relating to First Amended Joint Plan of Reorganization,
Wilmington, Delaware, January 28, 1997.
Note: Projections assume Marvel acquires Toy Biz for $326.8 million and issues 427 million common shares to Andrews Group
Incorporated for $365 million.
Page 12
Exhibit 9
Plan of Reorganization,
Page 13
Exhibit 10
Interest Rates
Federal Funds 5.18
3-month Commercial Paper 5.45
3-month Certificate of Deposit 5.42
Prime Rate 8.25
Notes:
a
On January 29, 1997, the U.S. Treasury Department issued the first inflation-indexed
Treasury Notes which provide a guaranteed rate of return above the rate of inflation.
b
The equity beta used to calculate the asset beta was estimated using daily data from
1/1/95 to 6/30/96 and the Scholes-Williams adjustment for non synchronous trading.
Page 14